French and German banks to establish a pan-European card network
Banks major concern is the potential emergence of MasterCard's Maestro as the dominant provider of debit card network services in Europe following the introduction of SEPA in 2008. The ECB (European Central Bank) pushed in the same direction when its governing council said it "strongly recommends" setting up at least one additional European debit card scheme to challenge the hegemony of MasterCard (cf. Smart Insights #07-37).
The European Commission, the European Central Bank and national central banks must approve the initiative before banks in other European countries can join the initiative. For the time being, informal exchanges have taken place between the European Commission and the banks, but no formal green light has been given.
According to the Financial Times, the banks want more "regulatory clarity" on interchange fees before proceeding. The EC would need to accept an "appropriate level" of interchange fees before the banks would invest in the scheme and may prefer, in the end, to continue to use the Visa and MasterCard networks if no "clear solution" is provided by the regulator.